Entrepreneurship – Its not that easy

There is a whole misconception and a whole amount of denigrating formal education doing the rounds.

There is, it is true, some cultural issues that make getting your hands dirty and doing menial jobs get looked down upon when people get a higher education.

However, let’s begin with entrepreneurship itself. Unfortunately, in Zambia, everyone wants to be a trader. That in itself is a disaster waiting to happen. Univeral petty trading is a sure sign as a country that income levels are still low and the country as a whole still rather poor.

It is a lot like subsistence farming. For an economy to rise you have to get out of subsistence anything. Farming or petty trading. Subsistence farming and petty trading never ever managed to make any economy grow. Reason for this is simple. There simply is not enough surplus available for investment.

Even Karl Marx in his analysis recognises that without a surplus you can’t have capitalists and a bourgeoisie.

The anti-degree post began by talking about a guy selling fritters or something at a school and making more than K9,000 a month. The truth is that seller is an exception, not the norm.

The average petty trader is scraping by and at a rather low level just like all the street vendors, the chikanda sellers, the fritter sellers, all of them are just about surviving. Not many of them do more than just hold body and soul together.

Otherwise, by now the whole Kanyama, Mandevu, Chipulukusu compounds etc would all have been transformed into middle-class neighbourhoods and their kids would go to high-class private schools and by now the biggest market for savings and banking products would have been among petty traders.

That vendor who makes more than a graduate at his school is able to do that simply because HE or SHE HAS A MONOPOLY. An Exception to the RULE. Reality is a typical petty vendor or trader has thousands of competitors selling the exact same product. Not an ideal siuation for breeding millionaires.

AS for people without degrees being successful businessmen. All the ones I know were very intelligent people who DROPPED OUT OF HIGHER EDUCATION to pursue their dream.

For instance, both the late Reeves Malambo and Chita Lodge proprietor James ” Jimmy” Chungu were University students at UNZA and very good ones at that. Both dropped out because THEIR BUSINESS ventures became so large they could not balance school work with business.

Reeves, for instance, was importing container loads of auto spare parts by the time he was in 3rd year and bringing in at least 2 or 3 cars a month. However and here is where my caveat starts both were very intelligent and both read and read and read.

Jimmy Chungu has a young brother who is an excellent lawyer. Yet James and Paulman engage in intellectual disputes at a level one can only follow if you have a degree or some sort of higher education. Jimmy may have dropped out of campus for business reasons but he has a razor sharp brain and he is an intellectual.

The same could be said about Reeves Malambo. His ability to dissect legal documents and contracts displayed a remarkably focused intellect. Even though Reeves had dropped out of campus, there was no doubt about his degree level intellect nor the fact that he had not stopped reading and learning.

Let us now get back to entrepreneurship. Let me say something here which any motivational speaker or anyone urging you to start a business ought to tell you.

80% of all businesses started fail. That is the truth. FAILURE is part of business. Ask any serious businessman. The reason is simple, like anything in life YOU LEARN and in business failing is part of learning.

By the time you get things right, you will have learned how to draft contracts, how to negotiate, how to plan your business activities, how to ensure cash flow, how to manage people and so on.

A few lucky businesses are a success from day one but they are the exception and not the rule.

Just remember as well it is normally unusual for you to be the only one to come up with a business idea. Take Facebook and Mark Zuckerberg do you remember he was not the only person in that space with some very good competitors particularly Hi Five and Myspace?

Some of us dinosaurs can even tell you even Microsoft Windows had plenty of competitors like GEM for instance. So no matter how unique an idea is, don’t be surprised that someone else has come up with it. Simply because the same factors that made you realise there was an opportunity may have also been noticed by someone else.

About seven years ago, I went to buy talk time. My favourite vendor did not have my network in stock. She complained that she always had to juggle stock around the three networks. She wondered out aloud can’t someone come up with talk time that works for all networks? My Eureka moment had arrived.

I put pen to paper and thought it through. I then began putting things together to realise that goal. Talktime that works on all networks. Six months later I join a company. Imagine what crosses my desk from my boss. Can you please do a write up to see how we can realise this idea. Guess what that idea was? Talktime that works on all networks.

I later entered my idea in the Nyamuka Business Plan competition and made it to the last 20 people. I did not make the final cut to 10. Why ? Well when I questioned them closely, I realised they all did not seem to know what I was talking about and when they did they did not think it was a business idea worth pursuing.

Meanwhile, I had reached a certain level wit my plan then I realised something there was another guy doggedly pursuing the same idea. I got a bit peeved because I felt someone had stolen my idea. I got so pissed off. I quit the whole thing.

Then the guy launched a couple of months ago. I researched him and his idea and guess what we started at the same time !!! There was no way he could have heard about my idea. He had his own Eureka moment.

Then yesterday, I was stuck somewhere and needed talk time. Guess what the vendor made the same grumble, How was she supposed to forecast talktime levels for each network? She belaboured the point that she sometimes gets stuck with talktime from one network perhaps talktime for all networks would be a great idea! Perhaps I need to wake it up again.

I digress. The truth is entrepreneurship is not for everyone. A real mix of skills is needed to succeed as an entrepreneur. Otherwise, know for a fact, most businesses you start will fail or limp along at subsistence level. It will take some experience and some learning before you take off.

Even then the type of entrepreneur this country needs is very short on the ground. Everyone in Zambia is a trader. For an economy to grow you need serious value addition. No economy will grow much if everyone is selling cheap imported Chinese goods at low markups. That type of trading is no different from peasant farming.

The truth is brutal competition wipes out the small traders and consolidation happens and very soon supermarkets and shops open.

My personal experience is that the entrepreneurs that succeed and rise above the rest of the petty traders tend to be better educated.

Take BUK. The owner of BUK is someone I knew at CBU. Benjy is a graduate of CBU with a Diploma in Marketing. Costain Chilala is not some peasant farmer who rose from nowhere. He actually has a diploma and worked as a farm manager for white commercial farmers. He used his skills to become one of the few indigenous commercial farmers.

I can tell you that high-quality diplomas are sometimes regarded the equivalent of degrees. In my own field, IT, for a long time the Evelyn Hone Diploma in IT was a very well-regarded qualification in some respects equal to or better than a degree and holders of that diploma have become some of the foremost practitioners of IT in this country. The Zambia Diploma in Marketing and its Accounting counterpart were very well-regarded qualifications as well.

I digress yet again. However, the point is even diplomas are excellent preparation for business. In short tertiary education provides very good foundations on which to build. That piece of paper shows you absorbed the principles of your chosen field. Earning diplomas and degrees is hard work and involves a lot study, research, writing papers etc.

When we work in real life, having a diploma or degree kicks in. For instance, if I want to do a business, how do I find out about it ? How do I write a business plan ? You will find that the report writing and research skills you learned at college or University will come in handy.

In Zambia, there are lots of simplifications one hears. One is you can’t go wrong with food. The truth is you can go wrong with food. You can rent premises which may eat all your profit and all you work for is the rent. Restaurant closes. Or have you ever tried to sell potatoes and tomatoes at Soweto? The traders dont just buy, they check quality and freshness. One mistake and your truckload of tomatoes goes to waste or sold at a cheap price. You sell beef and chicken and guess what the area where you open your butchery people are too poor to afford big pieces of meat or whole chickens and the more expensive cuts.

You can’t go wrong with property. Your husband dies and you buy one house with the money your husband left you. K600,000 and you can only rent it out at K2,500 and meanwhile your grocery bill alone is K5,000 alone !!!

Or you take all your retirement benefits and build a small strip mall six shops in a row. 2 years later you only have two tenants and you can barely pay your grocery bill.

Ahh perhaps payroll loans. You get all your savings and pour them into a payroll loan company. You sign up several companies big companies. Their employees begin to get loans from you. Then they begin paying you. Unfortunately, the companies you signed up have cash flow issues. Your monies start flowing in irregularly. Meanwhile, employees are having loans deducted from their payslips. The companies claim they are facing financial challenges and cannot remit funds at the stipulated time. Then one company writes to say they are amending the contract. They cannot continue because their auditors and board have decided the agreement is not a good one for the company as they are guaranteeing employee loans and assuming a large contingent liability. This means you have to chase employees individually and sign them up alone.

You get several big business contracts. They are all with government Ministries and parastatals. Your favourite nephew gets married. It so happens that a major opposition leader is an uncle to the bride. You end up seated next to him at the high table. You chat with him and several other opposition leaders who are there as well. Photographs circulate. The PS of the Ministry with the largest contract calls you in. He says he can’t do business with you. People are wondering why they are giving large contracts to an opposition sympathiser. Suddenly 70% of your business disappears just like that.

Your income is dependent on Government Ministries. Then a major fraud in one of the Ministries ties up your money there as the whole Finance Department and Procurement Department are placed under investigation and even the PS appears at ACC. A major scandal develops and it turns out that most of the money stolen was donor money Then the President says he will repay all the donor money. Seven months of sheer horror follows with not a single payment coming out of GRZ as the government does not fund the Ministries except for payroll and meanwhile, you have all these invoices with VAT pending, you have a payroll to meet etc.

These are all real life examples people have told me about businesses that failed Business is hard. Business is tough.

The truth is a degree is a valuable tool for any would-be entrepreneur. Especially in the field, you want to work in. Knowing the technology and knowing the theory behind how things work can provide valuable insights.

For instance USSD the star hash stuff on your phone was originally designed for engineers to send instructions to the GSM system. Some clever guy found other uses for it.

My advice to any entrepreneur, get an education if you can. Work a bit to gain experience then go ahead.

I know someone who is into signs, restaurants and some property on the side. He even once ran a filling station. His COO and chief adviser is his wife. He is a chartered accountant and his wife is a banker. He says without that valuable training as an accountant both on the audit side and a practising accountant, he would not know how to analyse business opportunities especially on whether they will make money or not.

Never look down on formal employment as well. Once you rise to a certain level your income and lifestyle are equal to that of a successful businessman or woman of high calibre.I know a lot of people who finally quit employment and went full time into business and were forced back into employment. You know why? They never realised how much their lifestyle was being supported by their jobs. Free Internet, Talktime, fuel, medical insurance, motor vehicle, housing allowance, holidays, cheap house and car loans etc. When you climb the corporate ladder things can become really good. Free annual holiday anywhere in Zambia. Self-liquidating loans. For instance, a car allowance of K12,000 a month and it can be used to buy a car using asset finance and the car allowance will be used to pay for the car. Same goes for housing allowance. Expense accounts at hotels and restaurants. And so on and so on.

Once you leave employment ALL THOSE THINGS now have to come from your pocket !!! Two years down the line you find AB who had started his own business is now Director at a bank once more !!!

I will not discourage you to start your own business as being your own boss is just fantastic. However, I would like to say don’t be afraid to fail. It will help you in the future.

We need entrepreneurs if this economy must grow but never ever forget it is not easy. As economists say there is no free lunch

4 Responses to Entrepreneurship – Its not that easy

That’s a good analysis and we respect your option because its based on what you understanding but Mr. editor the examples you have given i.e. “Your husband dies and you buy one house with the money your husband left you. K600,000 and you can only rent it out at K2,500 and meanwhile your grocery bill alone is K5,000 alone !!!” and …”Seven months of sheer horror follows with not a single payment coming out of GRZ as the government does not fund the Ministries except for payroll and meanwhile, you have all these invoices with VAT pending, you have a payroll to meet etc.”

What you need also to understand is that in this world their are 4 types of people 1 The Employed, Self employed ,investors & Businessmen were is this article linked

THERE IS NOTHING EASY WHETHER EDUCATION OR BUSINESS, WHAT IS NEEDED IS HARD WORK AND CAPITAL.

SOME PEOPLE DO NOT CHOOSE TO BE SMALL TRADERS THEY FIND THEM SELVES TO BE SMALL TRADERS ITS BECAUSE THEY ARE NOT EMPLOYED AND THEY DONT HAVE ENOUGH CAPITAL. AMONG THESE ARE TEACHERS , ACCOUNTANTS,MACHANICS ETC.

WE HAVE SOMALIANS WHO ARE NOT EDUCATED IN OUR COUNTRY BUT THEY ARE DOING VERY WELL IN BUSINESS MORE ESPECIALLY IN THE TRANSPORTATION SECTOR AND THEY NOW HIRING WELL ZAMBIAN QUALIFIED PEOPLE TO WORK FOR THEM.